The FTSE 100 took a large fall following renewed fears of Donald Trump winning the US Presidential Election November 8

Sterling failed to find direction, rising 0.1% to 1.298 against the US dollar, but falling 0.3% to 1.152 against the euro.

Investors shied away from global equities ahead of the first scheduled US presidential debate between Democratic candidate Hillary Clinton and Republican candidate Donald Trump before the November 8 election.

Connor Campbell, a financial analyst at SpreadEx, said: "The first televised debate marks the point where Trump vs Clinton will be even more unavoidable than it already is, and therefore has reminded the market that the Brexit, US interest rates and China's economic slowdown aren't the only macro-issues out there to worry about.

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"In other words, the markets have been reminded this morning that a Donald Trump presidency is still more than possible, sparking a sharp decline roughly on par with the gradual gains managed last week."

The debate is scheduled for 9pm US Eastern Time (2am BST).

Across Europe, the French Cac 40 fell more than 1.7% while the German Dax dropped 1.5% as Deutsche Bank shares dropped over 6% to fresh 20-year lows.

It follows a report by German magazine Focus suggesting the government has ruled out state aid for the bank.

It is believed that Deutsche's capital buffers could be hit by a £10.7 billion fine proposed by the US Department of Justice linked to the sale of mortgage-backed securities in the run-up to the financial crisis.

Investor concern over the German lender sparked a sell-off of European banking stocks, with Royal Bank of Scotland (RBS) down 2.8%, or 5.1p, to 177.5p, and Barclays down 1.9%, or 3.3p, to 168.1p.

In oil markets, Brent crude prices jumped 2.8% to 47.27 US dollars (£36.43) per barrel ahead of a three-day gathering of oil producers in Algiers.

Investors are hoping Opec members agree to cap or cut oil supply in a bid to support floundering crude prices.

On the UK's top-tier index, Standard Life shares dropped 10.9p to 342.3p amid news its investment arm would lift a trading suspension on its UK property fund, saying Britain's commercial real estate market has "stabilised" in the wake of the EU referendum.